Nickels and Dimes = Dollars

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Do you pay close attention to the sales tax and fees your pay?  As consumers we pay attention to the base price and consider that a “controllable expense.” Taxes and fees are beyond our purview and are viewed, at least by me, as an uncontrollable cost.

We have noted a trend where businesses, rather than raising their base price, are now adding fees and “surcharges” to increase their revenue.

Here are three examples.

Verizon just increased its “Administrative and Telco Recovery Charge” applied across its plans from $1.95 to $3.30, just over a 69% increase.  As seen in social forums, the review from many Verizon customers is critical.

TikTok user @killjill said in a recent video that she was eating brunch at a restaurant with friends when she noticed a 3.5% surcharge for “staff benefits” on her bill.  She said when she asked a restaurant worker what the “staff benefits” charge was for, they told her the charge was to cover healthcare for staff at the restaurant.

Another example we have witnessed is a small independent restaurant in Denver that charges 3% if a credit card is used.  In that the customer is encouraged to pay by cash, that policy may violate the operational rules of the issuing credit card companies.

What is of interest is that it appears that these surcharges are creeping into the golf industry.

For the past several years, the Troon-managed Ridge at Castle Pines has charged, in addition to the base gree fee, a 6% surcharge for “water costs.”

Some golf courses are charging a “fuel surcharge” for gasoline-powered carts.  Other golf courses are now stringently assessing single-rider cart fees.  Because cart fleets vary from 55 to 80, should every golf seek a personal cart, a daily shortage would occur

Del Ratcliffe, PGA, President of Ratcliffe Golf Services, Inc., manages the Mecklenburg County Golf Course and is one of the industry’s most astute golf course operators.   The golfer is assessed a $2.50 per player booking fee for the courses he manages.

Del stated, “this is probably the most controversial charge we do, and some golfers balk at paying the $2.50/player advanced booking fee.  However, many realize that the fee is a way for them to get better tee times and better rates (if they pre-pay) so they don’t balk at it.”

It is noteworthy that Mecklenburg County also requires that golfers pay a $0.25 per round fee into the Mecklenburg County fund for “junior golf” activities.

It is not beyond reason that some golf courses might implement a surcharge for capital expenses.

With budgeting now begun in earnest by golf courses for the 2023 golf season, do you think adding fees and surcharges is prudent to boost your revenue without changing the green fees?

While it would be simpler and more transparent to raise your base green fee rate, nickeling and diming your customers with fees and surcharges may be a way to mask rate increases.

What are your thoughts?  What is the preferred way to affect rate increases for 2023?

 

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4 comments

  1.    Reply

    Hi JJ
    Been awhile since I have been actively taking part last 3 years have been crazy busy.!

    We at Tri State Golf already put in place a fuel sir-charge ($1.00) back in May are looking to install a 3% sir charge to off-set credit card fees for 2023 we will only charge the fee on CC transactions.

  2.    Reply

    Interesting point of view. In fiscal year 2020 our credit card charges from the various card issuers was in excess of $42,000, which is a pretty hefty non-controllable operating cost. In reviewing the many fees charged by the card issuers, the amount charged was influenced by the rewards the customer was receiving. We implemented a 2.5% credit card convenience fee in 2021 that resulted in approximately $25,000 recovery of the fees or about 60% of the fees charged in 2020. Keep in mind that if it was a debit card, no fee was imposed and no fee if cash was used. Two significant things happened. The use of credit cards went down. so ur fees wnt down and the used of debit cards went up. So even though actual card transactions went up our transaction fees went down. The same story repeated in 2022. On the business side, it dod not cause anyone to not play. In fact our revenue was up 24% in 2021 while starts were up 23% in 2021 and revenue was up in 2022 by another 8% and starts up the same. It is a matter pf equity. Those that use a card which creates extra cost for the golf course pay extra. Those that pay cash or use debit don’t pay anything extra.

  3.    Reply

    JJ

    ClubCorp has been adding a 20% service charge to my bill for the past ten years with 5% going directly to revenue. The other 15% is split between management and used to cover slightly higher hourly rates for servers. Needless to say, the service staff turns over quite frequently since only a handful of member tip, pointing out that they have already been hit with the service charge.

    As a customer I typically over tip at a restaurant or at the club. It becomes a contentious point with management putting servers in an awkward position. Since the food service industry standard uses tips as the primary compensation for servers clubs are actually bucking the established system where the customer and servers lose out and the company is the sole beneficiary.

    Nobody likes nickle dime fees and charges. I am working with a club that includes sales tax in their posted rates. Since we are all accustomed to paying sales tax on top of the price and blaming it on the State I believe my client as an immediate opportunity to raise posted rates my merely eliminated the “sales tax included” statement thereby confroming to competitive norms.

  4.    Reply

    For me, nickels and dimes are the ultimate turnoff. They represent a lack of full disclosure and become a “gotcha” when viewing – or should I say “if” viewing – one’s receipt. They can leave the customer with the feeling of being played. Let me know up front what the cost is so that I can make an informed decision. As a professional, if I tacked on ancillary fees and surcharges after the fact I would not expect to have clients much longer. Living in Myrtle Beach, SC I have choices. Lucky me.